© Warchi/iStock
© Warchi/iStock

Content for this blog post comes from an unpublished paper that I have edited and revised for Aperio Group (UK) Ltd

For the last two decades there has been a drive to increase the amount of private investment and philanthropy going into the third sector and development sector.

Social investment and impact investment has developed rapidly in the UK and North America, with European-level organisations such as the European Venture Philanthropy Association (EVPA) driving the agenda across the EU. Quickly, however the discussion turned to measuring impact. After all, if you’re going to ask an investor to invest in your start up, they will want to know what kind of return on investment they can expect. Similarly, if you ask an investor to invest, loan to or grant to your social impact organisation, they will ask the same sorts of questions: what kind of social impact are you do you expect to achieve? How confident are you that this will happen? What will you do if it doesn’t happen?

So, quite separately from the wealth of monitoring and evaluation approaches that have been developed over the past 70 years, new systems have started to appear based on a private sector approach to measuring results and figuring out how to replicate financial returns with social returns (see the table below from the Aperio Group (Europe) Ltd). In some cases, where government has provided appropriate legislation, investors can get a limited return on their investment, tied to social impact performance.

Measurement ApproachFurther InformationDeveloped / Owned byAdoption
Global Impact Investing Rating System (GIIRS)https://b-analytics.net/giirs-fundsRockefeller Foundation / B-LabMedium
Impact Management Project Frameworkhttps://impactmanagementproject.comImpact Management ProjectHigh
Impact Measurementhttps://www.probonoeconomics.com/pbe-introduction-impact-measurementProbono EconomicsMedium
IRIS+https://iris.thegiin.orgThe GIINHigh
Managing Impact Approachhttps://evpa.eu.com/knowledge-centre/publications/measuring-and-managing-impact-a-practical-guideEVPALow
Measurement Frameworkhttps://www.thinknpc.org/themes/measure-and-manage-impact/impact-measurement-evaluation-and-data/New Philanthropy CapitalMedium
Methodology for Impact Analysis and Assessment (MIAA)https://www.investingforgood.co.uk/news/good-analystInvesting for GoodLow
Other quasi-experimental & experimental methodsMultipleHigh
Outcome Matrixhttps://www.goodfinance.org.uk/impact-matrixBig Society CapitalMedium
Randomised Control Trialshttps://en.wikipedia.org/wiki/Randomized_controlled_trialMultipleHigh
Social Return on Investmenthttp://www.socialvalueuk.orgSocial Value UKHigh
Theory of Changehttps://www.theoryofchange.orgCenter for Theory of ChangeHigh
Three-pillar Sustainability Approachhttps://www.lombardodier.com/home/sustainability/our-three-pillar-approach.htmlLombard OdierMedium
Total Contributionhttps://www.nefconsulting.com/our-services/evaluation-impact-assessment/total-contribution/New Economic FoundationLow

There is not one dominant approach yet. In their article on the Stanford Social Innovation Review website, Ivy So and Alina Capanyola argue that investors and investees actually use different approaches at different times in the project cycle (see chart below).

So, I.; Capanyola, A.S. How Impact Investors Actually Measure Impact, Stanford Social Innovation Review, 16 May 2016, available at https://ssir.org/articles/entry/how_impact_investors_actually_measure_impact#

 Some of these approaches will be familiar to you: Social Return on Investment (SROI), Theory of Change, (balanced) Scorecards, Randomised Control Trials have all been around for a while. So and Capanyola suggest that in the absence of a standardised approach, investors are combining approaches to determine the impact of their investments.  

A more standardised system for measuring impact is emerging, called IRIS+ managed by the Global Impact Investing Network and with 15,000 users. IRIS+ has developed standards and norms and is working to improve data clarity and comparability through a set of core metric sets.

In considering social performance measurement, the following points should be considered:

  • Social, environmental or cultural impacts are complicated, multi-dimensional concepts. Approaches that seek to monetise social costs or savings inevitably make assumptions that are difficult to verify. 
  • Most social problems are complex with multiple organisations tackling them, so direct attribution of long-term impact is difficult, and proxy indicators will need to be sought.
  • The objective of social investment is to strengthen the capacity of an organisation to achieve its mission in the long run, not to fund a specific set of outputs directly e.g. help a children’s charity to sustain a doubling of its service level in the long term, not fund one year’s service output.
  • major issue is the data management that underpins performance measurement. Key organisational readiness issues and barriers exist that need to be addressed if there is to be effective performance management. These include:
    • A lack of appropriate understanding and systems for data management and business intelligence.
    • Disparate forms of information/gaps in information.
    • Few defined performance measures.
    • Lack of capacity and priority.
    • Cultural issues and internal politics.
    • Cost of the project; not seeing the benefit of organisational performance and funding.

Measuring the social performance of any kind of investment, be it a traditional grant or donation, or a loan or financial investment is challenging. Have you had experience of social or impact investing? How did it go? Would you want social investment into your social impact organisation?


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